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Superfunds April 2016
Inresponse to increasing insurance
costs, many funds have increased their
premiums, changed their benefits or both.
Communicating these changes to members
represents an opportunity for funds but also
potential risk.
Insurance changes are a valuable opportunity
to promote the importance of your insurance
offering to members and demonstrate the
benefits of maintaining or increasing their cover.
The risk is that in promoting your insurance
offering to members, you may not be providing
all of the information needed to allow members
to make informed decisions about their
insurance cover.
Achieving a balance between compliance and
promotion can be tricky. What can funds do to
minimise this risk?
MINIMISE YOUR RISK
1. Be transparent
When communicating insurance changes, it
may be tempting to focus on the benefits of
your insurance offering and only mention details
such as conditions and definitions in the fine
print. However, by doing this you will miss out
on the chance to build trust with your members
by demonstrating your fund’s commitment to
transparency.
You will also leave the fund open to potential
complaints to the Superannuation Complaints
Tribunal (SCT), such as case D13-14\085. In this
case, the SCT found that a fund failed to provide
the information “reasonably necessary for [the
complainant] to understand the nature and effect
of the change in insurance arrangements”.
Where the fund went wrong was in focusing
on promoting the improved benefits that
members would receive, without adequately
explaining the conditions attached. Also, in the
newsletter communicating the changes, important
terms and conditions were put in a smaller font
than the rest of the text and no attention was
drawn to the importance of the information.
This case shows how vital it is to be transparent
in not only what you say to members, but also
in how you present the information. You need
to ensure you include all of the relevant terms,
conditions and definitions and give them equal
prominence in your messaging.
Being transparent also means providing
members with the context for the changes and
a means of comparing what they currently have
with what they will have.
Funds often provide the context for the
insurance changes in a notice to members, which
also includes an overview of the changes and
an outline of the further communications and
support to be provided. For example, the context
for insurance changes in recent times has included
changing economic conditions, increasing
insurance costs, claims pressure and regulatory
changes. Fund sustainability has also been a
driving factor.
Personalised communications generally
follow the notice to members. These clearly
outline the impacts of the changes on the
individual. In this way, members can understand
what they have currently and what they will have
after the changes. Transparency is again vital—
members need to know exactly what any new
premiums will cost them on a weekly, monthly
or annual basis and how this differs from their
current premiums.
2. Provide clear actions
Most insurance cover through super is provided
on an opt-out basis, so unless members
specifically opt out any changes to insurance will
automatically apply. This means there is a real
possibility of members paying for cover they do
not want or need. Once you have explained to
members what the changes are, you need to let
them know what their options are and how they
can contact you.